Homemaking maven Martha Stewart's media and merchandising firm Martha Stewart Living Omnimedia Inc is selling itself in a $353 million cash-and-stock deal to Sequential Brands Group Inc.
New York-based Sequential Brands, which buys and licenses out brands, owns Justin Timberlake's William Rast clothing brand among others. It bought a majority stake in the Jessica Simpson brand in April.
Sequential's $6.15 per share offer represents a premium of 21 percent to Martha Stewart Living's closing on June 17, a day before the Wall Street Journal first reported the deal.
Noble Financial Capital Markets analyst Michael Kupinski said the offer was "too low" and if the company was sold in bits, the sum of parts would be about $8 per share.
He added that the deal would give the Martha Stewart brand access to international markets.
The per-share offer is a sliver of what the stock was valued at in 1999 - it touched nearly $47.50 on the day it listed.
Stewart, who founded the company in 1997, has found both fame with her cookbooks, TV shows. She was briefly imprisoned following her conviction in 2004 in an insider trading case.
She stepped down as CEO and chairwoman in 2003 but was reappointed chairwoman in 2012.
The company's fortunes have suffered over the past few years as falling sales in its publishing business forced it to cut back on magazine issues and convert some titles to digital-only editions.
Martha Stewart Living gets more than half its revenue from its publishing business, which includes the Martha Stewart Living and Martha Stewart Weddings magazines. The company also merchandises home improvement products, sold by retailers such as Home Depot Inc and Macy's Inc.
Stewart, who owns 46.2 percent of Martha Stewart Living, will become a significant shareholder in Sequential and serve as its chief creative officer.
Martha Stewart Living's shares, which closed up 26.3 percent after the Journal's report on Thursday, fell as much as 14.4 percent to $5.97 on Monday. Sequential's shares rose 2.6 percent to a six-and-a-half year high of $17.45, but were little changed by midday.
Moelis & Co were Martha Stewart Living's financial advisers, while Debevoise & Plimpton LLP advised it on legal matters.
Private equity firm Tengram Capital Partners led the buyout for Sequential. The legal adviser was Gibson, Dunn & Crutcher LLP. Consensus Securities provided fairness opinion to Sequential.
BY SRUTHI RAMAKRISHNAN